Human Resource Planning & Development

UNIT - 1

Introduction

Human Resources planning is a process by which management determine how the organization should move from its current manpower position to its desired manpower position. Through planning, management strives to have the right number and the right kinds of people, at the right place, at the right time, doing things, which result in both organization and the individual receiving maximum long-run benefits HR planning is a mechanism created to forecast the required human resource to perform a specific task. It also assesses the skill requirement of employees for each job. It is a complex task which estimates the future demand and supply position of HR in the organization. Hence, it gives a picture of infinite future in advance in terms of human resource requirement for the company.

Meaning• Human resource planning involves getting the right number of qualified

people into the right jobs at the right time• It involves:

– Identifying and acquiring the right number of people with the proper skills

– Motivating them to achieve high performance – Creating interactive links between business objectives and resource

planning activities

Concept of HRP• Human Resource Planning (HR Planning) is both a process and a set of

plans.

• An effective HR plan also provides mechanisms to eliminate any gaps that may exist between supply and demand. Thus, HR planning determines the members and types of employees to be recruited into the organization or phased out of it.

• Dynamic by nature, the HR planning process often requires periodic readjustments as labor market conditions change

• It is how organizations assess the future supply of and demand for human resources.

Definition

• Acc to Geisler, “ HRP is the process including forecasting, developing, implementing & controlling – by which a firm ensures that it has the right number of people & right kind of people, at the right place ,at the right time doing things for which they are economically most suitable.

Why is HRP important ?

• Even an imperfect forecast is better than none at all

• Anticipating needs – prepare for the future gives you an edge

• Address potential problems – avoid skill deficiencies

What is HRP?

• HRP is a sub-system of total organizational planning.

• HRP facilitates the realization of the company’s objectives for the future by providing the right type and number of personnel

• HRP is also called Manpower planning, Personnel planning or Employment planning

• HRP ensures that the organization has:– Right Number– Right Kind– Right Place– Right Time

Objectives of HRP

• Forecasting Human Resource Requirement• Effective Management of change• Realizing Organizational Goals• Effective utilization of HR• Promoting Employees

Objectives of HRP• Forecasting Human Resources Requirements: HRP is essential to

determine the future needs of HR in an organization. In the absence of this plan it is very difficult to provide the right kind of people at the right time.

• Effective Management of Change: Proper planning is required to cope with changes in the different aspects which affect the organization. These change needs continuation of allocation/ reallocation and effective utilization of HR in organization.

• Realizing the Organizational Goals: In order to meet the expansion and other organizational activities the organizational HR planning is essential.

• Promoting Employees: HRP gives the feedback in the form of employee data which can be used in decision-making in promotional opportunities to be made available for the organization.

• Effective Utilization of HR: The data base will provide the useful information in identifying surplus and deficiency in human resources.

Needs of HRP• Employment – Unemployment situation• Technological change• Organizational change• Demographic change• Skill shortage• Government influence• Legislative control• Impact of the pressure group• Systems approach• Lead time

NEEDS OF HRP

• Employment-Unemployment Situation: Though in general the number of educated unemployment is on the rise, there is acute shortage for a variety of skills. This emphasis is the need for more effective recruitment and retaining people.

• Technological Change: The myriad changes in production technologies, marketing methods and management techniques have been extensive and rapid. Their effect has been profound on the job contents and job contexts. These changes cause problems relating to redundancies, retaining and redeployment. All these suggest the need to plan manpower needs intensively and systematically.

• Organizational Change: In the turbulence environment marked by cyclical fluctuations and discontinuities, the nature and pace of changes in organizational environment, activities and structures affect manpower requirements and require strategic considerations.

• Demographic Change: The changing profile of the work force in terms of age, sex, literacy, technical inputs and social background has implications for HRP.

• Skill Shortage: Unemployment does not mean that the labour market is a buyer’s market. Organizations generally become more complex and require a wide range of specialist skills that are rare and scare. Problems arise when such employees leave.

Cont………• Governmental Influences: Government control and changes in legislation with regard to affirmative

action for disadvantages groups, working conditions and hours of work, restrictions on women and child employment, causal and contract labour, etc. have stimulated the organizations to be become involved in systematic HRP.

• Legislative Control: The policies of “hire and fire” have gone. Now the legislation makes it difficult to reduce the size of an organization quickly and cheaply. It is easy to increase but difficult to shed the fat in terms of the numbers employed because of recent changes in labour law relating to lay-offs and closures. Those responsible for managing manpower must look far ahead and thus attempt to foresee manpower problems.

• Impact of the Pressure Group: Pressure groups such as unions, politicians and persons displaced from land by location of giant enterprises have been raising contradictory pressure on enterprise management such as internal recruitment and promotion, preference to employees’ children, displace person, sons of soil etc.

• Systems Approach: The spread of system thinking and advent of the macro computer as the part of the on-going revolution in information technology which emphasis planning and newer ways of handling voluminous personnel records.

• Lead Time: The log lead time is necessary in the selection process and training and deployment of the employee to handle new knowledge and skills successfully.

Benefits of HRP

• Defining future personnel needs• Coping with change• Providing base for developing talents• Forcing top management to involve in HRM

Factors affecting HRP

ORGANIZATIONAL GROWTH CYCLES & PLANNING• Embryonic stage – No personnel planning• Growth stage – HR forecasting is essential• Maturity stage – Planning more formalized & less flexible• Declining stage – Planning for layoff, retrenchment &

retirement

ENVIRONMENTAL UNCERTAINITIES• Political, social & economic changes• Balancing programmes are built into the HRM programme

through succession planning, promotion channels, layoffs, flexi time, job sharing, retirement, VRS, etc….

Factors affecting HRP

TIME HORIZONS• Short-term & Long-term plans

TYPE & QUALITY OF FORECASTING INFORMATION• Type of information which should be used in

making forecasts

NATURE OF JOBS BEING FILLED• Difference in employing a shop-floor worker & a

managerial personnel

HRP ProcessENVIRONMENT

ORGANISATIONALOBJECTIVES AND POLICIES

HR NEEDS FORECAST HR SUPPLY FORECAST

HR PROGRAMMING

HRP IMPLEMENTATATION

CONTROL AND EVALUATION OF PROGRAMME

SURPLUS SHORTAGE RESTRICTED HIRING RECRUITMENT REDUCED HOURS AND SELECTION VRS, LAY OFF, etc

THE HRP PROCESS

Organizational Objectives and Policies

HR plans need to be based on Organizational Objectives. The role of HRP is to subserve the overall objectives by ensuring

availability and utilization of Human Resources. In developing these objectives, specific policies need to be formulated

to address the following questions: Are vacancies to be filled from promotions from within or hiring from outside? How do training and development objectives interfere with the HRP

objectives? What union constraints are encountered in HRP and what policies are needed

to handle these constraints? How to enrich employees job? Should the routine and boring jobs continue or

be eliminated? How to downsize the organization to make it more competitive?

HR Demand Forecast

• Demand forecasting is the process of estimating the future quantity and quality of people required.

• The basis of the forecast must be the annual budget and long-term corporate plan, translated into activity levels for each function and department

• Demand forecasting must consider several factors both internal and external.• Among external factors are competition(foreign and domestic), economic climate, laws and regulatory

bodies, changes in technology and social factors.• Internal factors include budget constraints, production

levels, new products and services, organizational structure and employee

separation.

Demand forecasting helps to:

– Quantify the jobs necessary for producing a given number of goods

– Prevent shortage of people where and when they are needed most

– Determine what staff-mix is desirable in the future– Monitor compliance with legal requirements with regard to reservation of jobs – Asses appropriate staffing levels in different parts

of the organization so as to avoid unnecessary costs

Forecasting Techniques

• Managerial judgement• Ratio-trend analysis• Work study techniques• Delphi technique• Flow models• Other technique

Managerial Judgement

• In this all managers sit together, discuss and arrive at a figure which would be the future demand for labour.

• This technique may involve a ‘bottom-up’ or ‘top-down’ approach. A combination of both could yield positive results.

Ratio-trend analysis

• This is the quickest forecasting technique.• This technique involves studying past ratios,

say, between the number of workers and sales in an organization and forecasting future ratios, making some allowance for changes in the organization or its method

Work-study techniques

• Work study techniques can be used when it is possible to apply work measurement to calculate the length of operations and the amount of labour required

Delphi technique

• This technique is the method of forecasting personnel needs.

• It solicits estimates of personnel needs from a group of experts, usually managers.

• The HRP experts act as intermediaries, summarize the various responses and report the findings back to the experts.

• Summaries and surveys are repeated until the experts opinion begin to agree.

HR SUPPLY FORECAST

• Supply forecasting measures the no of people likely to be available from within and outside an organization, after making allowance for absenteeism, internal movements and promotions, wastage and changes in hours and other conditions of work.

Need for supply forecast

• Quantify no of people and positions expected in near future.

• Clarify the staff mixes.• Prevent shortage of people• Asses present staffing levels in different parts

of organization.

Supply Analysis

• Existing human resources

• Internal sources of supply

• External sources of supply

Existing human resources

• Skill inventories – 1. Personal data 2. Skills 3. Special qualifications 4. Salary and job history 5. Company data 6. Capacity of individual 7. Special preference of individual

• Management inventories 1. Work history 2. Strengths 3. Weakness 4. Promotion potential 5. Career goals 6. Personal data 7. Number and types of employees supervised 8. Total budget managed 9. Previous management duties.

Internal supply and techniques

• Inflows and outflows IS= current supply – outflow + inflow

• Turnover rate No of seperations during one year × 100 Avg no of employees during the year

• Conditions of work and absenteeism. Absenteeism is given by no of persons – days lost ×100

Avg no of persons × no of working days

• Productivity level

External supply

• New blood and new experience

• To replenish old personnel

• Organizational growth and diversification

HR programming

• After personal demand and supply forecast, the two must be balanced or reconciled. this will help to fill the vacancies at right time with right kind of employees

HR Plan implementation

• Converting HR plan into action.• Action programmes are..

• Recruitment• Selection & placement• Training and development• Retraining & redeployment• The retention plan• The retrenchment plan• The VRS plan

Control and evaluation

• Establish the reporting procedures• Identifying who are in post and those who are

in pipe line• It should report employment costs against

budget and trends in wastage and employment ratios

Approaches to HRP

• Social demand Approach• Rate of return Approach• Manpower requirement Approach• Quantitative Approach• Qualitative Approach• Mixed Approach

Social Demand ApproachThe social demand approach lies on the assessment of society’s requirement for education. In

principles, it is an aggregate of individuals demand for education in respect of all individuals within the society. It is not always possible particularly in large societies, to assess individual demand for education. In practice, therefore, social demand approach relies on a projection of past trends in demographic aspects of population and the enrollment at the different levels of education.

Social demand approach is thus capable of revealing the number of students with differently typesof professional preparations that may be a given target date, based on past experiences. Projections of social demand for education are contingent upon given levels of:

• Income of educated people,• Taste and references of household for education,• Demographic characteristics such as fertility and mortality,• Direct costs of education,• Student grants, and• Existing standard of admission to various levels of education. Added to these constraints, there are the perennial problems associated with the data base

on demographic aspects at disaggregated levels such as districts, blocks and villages and data on wastage and stagnation in education, and intensity of utilization of existing educational facilities. Social demand approach thus suffers from the suffers from the difficulties associated with any futurological exercise. difficulties associated with any futurological exercise.

Rate of Return Approach Critics of social demand approach argue that the decision to choosemore or less of education, beyond a legal school-learning age, is made by an individual who

attachesa positive value to the present and the future benefits of education. Aggregate of individuals

demandfor education, which is constructed the social demand for education, should then be based

exaggerateof individuals assessment of benefits of education-reflecting the social benefits.This brings us the rate of return approach to education: Rate of return approach looks upon education as a contributor to productivity and this

sense, it is expected to facilitate investment decisions in education whether or not the students should undergo

more schooling, or whether or not the state should invest more and expand educational facilities.

Like in the rate of return on investment analysis, rate of return on investment in education is used

to expand educational facilities until schooling equalizes.• On the one hand yield of investment in different types of education, and• On the other hand yield of investment in education vis-à-vis other sectors of economy.

Manpower Requirement Approach

The fundamental axioms of manpower requirements approach is that there is a definite link between the education and economic growth and that lack of skilled manpower in required number impedes growth. In this approach an attempt is made to forecast future requirements of educated manpower to fulfill a future target of Gross National Product (GNP) or specified targets of industrial production. Based on the forecasts of educated manpower requirement over a specified period, the planners would then indicate the directions of development of the educational sector over the same specific period.

Basics steps in MRA• Anticipating the directions and the magnitude of development of

each individual sectors of the economy.• Evolving norms of the employing manpower in each individual sector

keeping the view the• Technological options—Present as well as future—for each sector of

the economy.• Translating the physical targets for the development of each

individual sector into the manpower requirement using the sector specific manpower norms.

• Estimating the educational; equivalents of the manpower requirement.

• Analyzing the implications of estimates of educated manpower requirements for educational

Quantitative Approach

• It is also known as top down approach of HR planning under which top level make and efforts to prepare the draft of HR planning. It is a management-driven approach under which the HR planning is regarded as a number's game. It is based on the analysis of Human Resource Management Information System and HR Inventory Level. On the basis of information provided by HRIS, the demand of manpower is forecasted using different different quantitative tools and techniques such as trend analysis, mathematical models, economic models, market analysis, and so on. The focus of this approach is to forecast human resource surplus and shortages in an organization. In this approach major role is played by top management.

Qualitative Approach

• This approach is also known as bottom up approach of HR planning under which the subordinates make an effort to prepare the draft of HR planning. Hence, it is also called sub-ordinate-driven approach of HR planning. It focuses on individual employee concerns. It is concerned with matching organizational needs with employee needs. Moreover, it focuses on employee's training, development and creativity. Similarly, compensation, incentives, employee safety, welfare, motivation and promotion etc. are the primary concerns of this approach. In this approach, major role is played by lower level employees.

Mixed Approach

• This is called mixed approach because it combines both top-down and bottom-up approaches of HR planning. In fact, the effort is made to balance the antagonism between employees and the management. Hence, it tends to produce the best result that ever produced by either of the methods. Moreover, it is also regarded as an Management By Objective(MBO) approach of HR planning. There is a equal participation of each level of employees of the organization.

IMPORTANCE OF HRP

1. FUTURE PERSONNEL NEEDS• Surplus or deficiency in staff strength• Results in the anomaly of surplus labor with the lack of top executives

2. COPING WITH CHANGE• Enables an enterprise to cope with changes in competitive forces,

markets, technology, products & government regulations

3. CREATING HIGHLY TALENTED PERSONNEL• HR manager must use his/her ingenuity to attract & retain qualified &

skilled personnel• Succession planning

4. PROTECTION OF WEAKER SECTIONS• SC/ST candidates, physically handicapped, children of the socially

disabled & physically oppressed and backward class citizens.

IMPORTANCE OF HRP

5. INTERNATIONAL STRATEGIES• Fill key jobs with foreign nationals and re-assignment of

employees from within or across national borders

6. FOUNDATION FOR PERSONNEL FUNCTIONS• Provides information for designing & implementing

recruiting, selection, personnel movement(transfers, promotions, layoffs) & training & development

7. INCREASING INVESTMENTS IN HUMAN RESOURCES• Human assets increase in value

8. RESISTANCE TO CHANGE AND MOVE• Proper planning is required to do this

IMPORTANCE OF HRP

. OTHER BENEFITS• Upper management has a better view of the HR

dimensions of business decision• More time is provided to locate talent• Better opportunities exist to include women &

minority groups in future growth plans• Better planning of assignments to develop

managers can be done

Time Dimension of HRP

• Short – term Human Resource Planning a. Matching at organizational level

b. Matching at individual level• Long – term Human Resource Planning

Types of HR Plans• Philosophy: The organisations’ role that they wish to play in society in terms

ofphilosophy. The philosophy of the company should have clarity of thought andaction in the accomplishment of economic objectives of a country. Thephilosophy bridges the gap between society and the company.• Purpose: Every kind of organized group activities or operations has a purpose.For example, the purpose of a bank is to accept deposits and grant loans andadvances.• Objectives: Objectives are the ends towards which organisational activity isaimed. Every department has its own objectives which may not be completelysame as of the other department or organisation.• Strategies: Strategy is determination of the basic long term objectives of anenterprise and the adoption of courses of action and allocation of resourcesnecessary to achieve these goals.

• Policies: Policies are general statements or understandings which guide ordirect thinking and action in decision making. However, all policies are notstatements.• Procedure and Rules: Procedures are plans that establish a desired method

ofhandling future activities. They detail the exact manner in which a certainactivity must be accomplished.• Programmes: These are complexes of goals, policies, procedures, taskassigment rules, steps to be taken, or sources to be employed and other elementsnecessary to carry out a given course of action.• Budget: A budget is a statement of expected results in terms of members. It

maybe referred to as a numerical programme. Cash budget, sales budget, capitalexpenditure budget are some of the examples of budget.

Requisites for successful HRP

Recognize of corporate planningBacking of top management for HRPHRP responsibilities should be centralizedPersonnel record must be complete, up-date and

readily availableThe time horizon of plan should be long for

remedial actionThe techniques of planning should be best suitPlans should be prepared by skill levelData collection, analysis, techniques

Barriers to HRP

• Improper linkage b/w HRP & corporate strategy

• Inadequate appreciation of HRP• Rigidity in attitude• Environmental uncertainties• Conflict b/w long term & short term HRP• Inappropriate HR information system